South African Gold Mining Stock AngloGold Ashanti Gets Upgraded, Gold Fields Downgraded

The SPDR Gold Trust GLD is up 15.8% since Oct. 1, and gold prices are approaching $2,000 per ounce for the first time since April 2022.

On Monday, one gold miner analyst adjusted his coverage of South African gold miners and said investors should tread carefully in the region.

The Analyst: Bank of America analyst Cameron Needham has issued the following ratings changes:

• Upgraded AngloGold Ashanti Limited AU from Neutral to Buy with a price target of $24.
• Downgraded Gold Fields Limited GFI from Buy to Neutral with a price target of $12.20.

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The Thesis: As a whole, Needham said he is bullish on the outlook for gold but prefers stocks that have either a proven track record of value creation or potential for value creation via restructuring or operational improvements. Among the South African miners, Needham says AngloGold fits the bill.

"ANG’s restructuring programme is underway and as such, we view the risk-reward as somewhat skewed towards the upside as operational improvements are delivered," Needham said.

Related Link: If You Invested $1,000 In The GLD Gold ETF At Its Pandemic Low, Here's How Much You'd Have Now

Needham says the termination of Gold Field's merger deal with Yamana Gold Inc AUY and the resignation of its CEO create an uncertainty overhang for the stock. He also reiterated an Underperform rating for Harmony Gold Mining Co. HMY with a $2.20 price target, citing how the company's poor track record with facilities creates a safety risk for investors.

Benzinga's Take: Gold has historically had a very low correlation with stock prices, making it a great way to protect your portfolio from a stock market sell-off. While gold does not generate any cash flow or yield directly, it may still be the best option in today's market for investors looking for an effective inflation hedge that can hold up amid a broad stock market sell-off.